House prices predicted to fall

Up to £20,000 could be wiped off the average value of a home during the coming months, it has been predicted.

House prices could end 2008 10% below the peak they reached in August last year, according to analysts at accountants Grant Thornton.

A fall of this level would wipe around £400 billion off the nation's wealth held in bricks and mortar, while it will also deliver a huge blow to consumer confidence and potentially also to the wider economy, according to a report in the Daily Mail newspaper.

Grant Thornton warned that a fall in house prices would make homeowners feel poorer, causing them to tighten their belts and cut back on spending.

This in turn could lead to falling high street sales, leading to possible store closures and job losses.

No one from Grant Thornton was immediately available to comment on the report.

But Maurice Fitzpatrick, a senior tax partner at the firm, was quoted in the Daily Mail as saying: "It appears that house prices hit their peak in August.

"We can expect a fall of 3% by the end of 2007, followed by a further fall of 7% in 2008. This would wipe £400 billion off the value of UK residential property or an average of £20,000 per household.

"A 'burn off' of this degree of personal wealth would tend to make people more cautious about borrowing. That would damage any feel good factor and, potentially, economic growth."

Economics group Capital Economics is also pessimistic about the outlook for the housing market during 2008.